Context:-
It is now celebrates 30 years since India’s economic liberalization programme began. Massive libraries can be built solely devoted to how the Indian economy and Indian lives have changed since 24 July 1991, but let us swim against the tide and go back several decades before 1991, and look at something that’s core to reforms, an area where much has changed, yet much may not have.
Mohammadali Carim Chagla, an extraordinary man who is largely forgotten today.
Chagla was chief justice of the Bombay High Court, was handpicked by India’s first prime minister, Jawaharlal Nehru, to be our ambassador to the United States, was education minister from 1963 to 1966 and then briefly minister for external affairs in Indira Gandhi’s cabinet.
He went on to be a leading voice against the Emergency. Throughout his distinguished career, he stood for certain inalienable principles of liberty, nationalism and secularism.
Chagla saw from close quarters, the like of Muhammad Ali Jinnah to Nehru, John F. Kennedy to Fidel Castro. But lets confine to one episode, again largely forgotten today—the Haridas Mundhra affair, which was the first big financial scandal of independent India.
In 1957, Parliament was rocked by allegations that Life Insurance Corporation (LIC), under pressure from the finance ministry, had bought worthless shares in companies promoted by Calcutta-based businessman Mundhra for ₹1.24 crore—about ₹9,000 crore in current terms.
The finger of suspicion pointed towards then finance minister T.T. Krishnamachari and finance secretary H.M. Patel, both of whom denied any knowledge of the matter. Under fire in Parliament and in the media, Nehru appointed Chagla as a one-man inquiry commission.
Chagla submitted his report within a month, which must still be a record for Indian inquiry commissions. Though no direct guilt could be established, Nehru had no option but to ask Krishnamachari to take responsibility for the LIC scandal and resign. Mundhra went to prison.
The last section of Chagla’s report starts with the words: “If I may say so, without undue presumption, the following principles seemed to be established as a result of a careful consideration of all the material that has been placed before me…“
He then made some recommendations.
- One, the government should not interfere with the working of autonomous statutory corporations.
- Two, the chairman of the corporation should be appointed from among persons who have business and financial experience.
- Three, if executive officers of the corporation are to be appointed from the civil services, it should be impressed upon them that they owe a duty to the corporation, and that they should not permit themselves to be influenced by senior officials of government, or surrender their judgement to them.
- Four, the funds of LIC can only be used for the benefit of its policy holders and not for any extraneous purpose. If they are used for any extraneous purpose, that purpose should be in the larger interests of the country.
- Five, in a parliamentary form of government, Parliament should be taken into confidence by the relevant minister at every stage, and all the relevant material must be placed before it.
- Six, a minister must take full responsibility for the acts of his subordinates, and he cannot be permitted to say that his subordinates did not reflect his policy or acted contrary to his wishes and directions.
These recommendations were made in February 1958. Can anyone argue that they were wrong? And can anyone claim that they have not been extensively ignored by almost every government?
Politicians in power have routinely used the resources—in cash and kind—of public sector units (PSUs) to further their own narrow objectives.
Ability vs Loyalty
- By the 1970s, the heads of some of the largest and wealthiest of these corporations were being appointed for political loyalty rather than ability.
- Bureaucrats with no domain expertise were heading PSUs in sectors that needed specialized knowledge, and they would do the bidding of the bureaucrats they reported to.
- This was in their personal career interests, which may or may not have had anything to do with the company’s.
- LIC has traditionally been the favourite milch cow for governments. Its money has been used to shore up markets, buy useless stock in dead-end PSUs and help out crony capitalists.
- A significant part of the disinvestment figures claimed by governments has been one PSU being forced to buy shares in another PSU, which is nothing other than transferring money from one pocket to another without real economic or financial goals being met.
- On the other hand, several once-valuable PSUs have been sold off at a pittance after they had been systematically run into the ground.
Conclusion
Yes, an LIC public issue is said to be in the works, and a general insurance company is to be privatized. But there is uncertainty about when these could happen. The longer the government waits, the less money it will possibly end up raising. Meanwhile, as we celebrate 30 years of the economic reforms, Chagla’s recommendations remain as valid as they were more than six decades ago.
Recent Posts
- In the Large States category (overall), Chhattisgarh ranks 1st, followed by Odisha and Telangana, whereas, towards the bottom are Maharashtra at 16th, Assam at 17th and Gujarat at 18th. Gujarat is one State that has seen startling performance ranking 5th in the PAI 2021 Index outperforming traditionally good performing States like Andhra Pradesh and Karnataka, but ranks last in terms of Delta
- In the Small States category (overall), Nagaland tops, followed by Mizoram and Tripura. Towards the tail end of the overall Delta ranking is Uttarakhand (9th), Arunachal Pradesh (10th) and Meghalaya (11th). Nagaland despite being a poor performer in the PAI 2021 Index has come out to be the top performer in Delta, similarly, Mizoram’s performance in Delta is also reflected in it’s ranking in the PAI 2021 Index
- In terms of Equity, in the Large States category, Chhattisgarh has the best Delta rate on Equity indicators, this is also reflected in the performance of Chhattisgarh in the Equity Pillar where it ranks 4th. Following Chhattisgarh is Odisha ranking 2nd in Delta-Equity ranking, but ranks 17th in the Equity Pillar of PAI 2021. Telangana ranks 3rd in Delta-Equity ranking even though it is not a top performer in this Pillar in the overall PAI 2021 Index. Jharkhand (16th), Uttar Pradesh (17th) and Assam (18th) rank at the bottom with Uttar Pradesh’s performance in line with the PAI 2021 Index
- Odisha and Nagaland have shown the best year-on-year improvement under 12 Key Development indicators.
- In the 60:40 division States, the top three performers are Kerala, Goa and Tamil Nadu and, the bottom three performers are Uttar Pradesh, Jharkhand and Bihar.
- In the 90:10 division States, the top three performers were Himachal Pradesh, Sikkim and Mizoram; and, the bottom three performers are Manipur, Assam and Meghalaya.
- Among the 60:40 division States, Orissa, Chhattisgarh and Madhya Pradesh are the top three performers and Tamil Nadu, Telangana and Delhi appear as the bottom three performers.
- Among the 90:10 division States, the top three performers are Manipur, Arunachal Pradesh and Nagaland; and, the bottom three performers are Jammu and Kashmir, Uttarakhand and Himachal Pradesh
- Among the 60:40 division States, Goa, West Bengal and Delhi appear as the top three performers and Andhra Pradesh, Telangana and Bihar appear as the bottom three performers.
- Among the 90:10 division States, Mizoram, Himachal Pradesh and Tripura were the top three performers and Jammu & Kashmir, Nagaland and Arunachal Pradesh were the bottom three performers
- West Bengal, Bihar and Tamil Nadu were the top three States amongst the 60:40 division States; while Haryana, Punjab and Rajasthan appeared as the bottom three performers
- In the case of 90:10 division States, Mizoram, Assam and Tripura were the top three performers and Nagaland, Jammu & Kashmir and Uttarakhand featured as the bottom three
- Among the 60:40 division States, the top three performers are Kerala, Andhra Pradesh and Orissa and the bottom three performers are Madhya Pradesh, Jharkhand and Goa
- In the 90:10 division States, the top three performers are Mizoram, Sikkim and Nagaland and the bottom three performers are Manipur and Assam
In a diverse country like India, where each State is socially, culturally, economically, and politically distinct, measuring Governance becomes increasingly tricky. The Public Affairs Index (PAI 2021) is a scientifically rigorous, data-based framework that measures the quality of governance at the Sub-national level and ranks the States and Union Territories (UTs) of India on a Composite Index (CI).
States are classified into two categories – Large and Small – using population as the criteria.
In PAI 2021, PAC defined three significant pillars that embody Governance – Growth, Equity, and Sustainability. Each of the three Pillars is circumscribed by five governance praxis Themes.
The themes include – Voice and Accountability, Government Effectiveness, Rule of Law, Regulatory Quality and Control of Corruption.
At the bottom of the pyramid, 43 component indicators are mapped to 14 Sustainable Development Goals (SDGs) that are relevant to the States and UTs.
This forms the foundation of the conceptual framework of PAI 2021. The choice of the 43 indicators that go into the calculation of the CI were dictated by the objective of uncovering the complexity and multidimensional character of development governance
The Equity Principle
The Equity Pillar of the PAI 2021 Index analyses the inclusiveness impact at the Sub-national level in the country; inclusiveness in terms of the welfare of a society that depends primarily on establishing that all people feel that they have a say in the governance and are not excluded from the mainstream policy framework.
This requires all individuals and communities, but particularly the most vulnerable, to have an opportunity to improve or maintain their wellbeing. This chapter of PAI 2021 reflects the performance of States and UTs during the pandemic and questions the governance infrastructure in the country, analysing the effectiveness of schemes and the general livelihood of the people in terms of Equity.
Growth and its Discontents
Growth in its multidimensional form encompasses the essence of access to and the availability and optimal utilisation of resources. By resources, PAI 2021 refer to human resources, infrastructure and the budgetary allocations. Capacity building of an economy cannot take place if all the key players of growth do not drive development. The multiplier effects of better health care, improved educational outcomes, increased capital accumulation and lower unemployment levels contribute magnificently in the growth and development of the States.
The Pursuit Of Sustainability
The Sustainability Pillar analyses the access to and usage of resources that has an impact on environment, economy and humankind. The Pillar subsumes two themes and uses seven indicators to measure the effectiveness of government efforts with regards to Sustainability.
The Curious Case Of The Delta
The Delta Analysis presents the results on the State performance on year-on-year improvement. The rankings are measured as the Delta value over the last five to 10 years of data available for 12 Key Development Indicators (KDI). In PAI 2021, 12 indicators across the three Pillars of Equity (five indicators), Growth (five indicators) and Sustainability (two indicators). These KDIs are the outcome indicators crucial to assess Human Development. The Performance in the Delta Analysis is then compared to the Overall PAI 2021 Index.
Key Findings:-
In the Scheme of Things
The Scheme Analysis adds an additional dimension to ranking of the States on their governance. It attempts to complement the Governance Model by trying to understand the developmental activities undertaken by State Governments in the form of schemes. It also tries to understand whether better performance of States in schemes reflect in better governance.
The Centrally Sponsored schemes that were analysed are National Health Mission (NHM), Umbrella Integrated Child Development Services scheme (ICDS), Mahatma Gandh National Rural Employment Guarantee Scheme (MGNREGS), Samagra Shiksha Abhiyan (SmSA) and MidDay Meal Scheme (MDMS).
National Health Mission (NHM)
INTEGRATED CHILD DEVELOPMENT SERVICES (ICDS)
MID- DAY MEAL SCHEME (MDMS)
SAMAGRA SHIKSHA ABHIYAN (SMSA)
MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME (MGNREGS)